Nvidia CEO Jensen Huang has once again told how the partnership between Nvidia and TSMC began. Not through an investor or a networking event, but through the Yellow Pages. In a video circulating on X this week, Huang describes how in the 1990s he looked up the number of TSMC’s American office, got an answering machine and left his name and number. He called several times. Nobody called back.
Nvidia was then a small start-up that designed graphics chips but had no factory of its own. Finding a manufacturer was a matter of survival. So Huang wrote a letter, directly to TSMC founder Morris Chang. For a long time there was silence. Until one day, around six in the evening, Chang himself called. On the floor outside Huang’s office, employees were noisily playing video games. Huang shouted: “Quiet, everyone, it’s Morris!”
Chang told the same story earlier from his side, in an interview with the Acquired podcast. According to him, the letter arrived in 1997 via the post office in Hsinchu, where TSMC has its headquarters. TSMC’s sales office in San Jose had left Nvidia’s request lying around. That made Chang curious, but also a little annoyed. He looked up the phone number on the letterhead and called Huang himself.
TSMC could serve such a customer because of the model on which Chang founded the company in 1987. TSMC does not design chips itself, but makes them exclusively to order for others. That allowed small design companies without their own factories, such as Nvidia, to still work with advanced production processes. Building its own factory was unaffordable for a start-up with fifty employees.
One month’s salary left
The timing was tight. Nvidia had already laid off half of its hundred employees to put all its resources into one chip: the RIVA 128. When that chip came onto the market in August 1997, the company had money left for one month’s salaries. At their first meeting, Huang told Chang that Nvidia was in financial trouble. The new chip would save the company and make Nvidia a big TSMC customer, he promised.
The balance was lopsided. TSMC had existed for ten years and, according to Chang, had revenue of more than a billion dollars. At that time Nvidia had fifty to sixty employees. Huang remembers TSMC as smaller: in the video he estimates the company back then at around 300 million dollars. He describes TSMC and its competitor UMC at the time as both poor companies that were barely getting by.
From RIVA to GeForce: Nvidia and TSMC grow together
TSMC sent two production planners to Nvidia, who stayed for a month. Mass production began in 1998: the RIVA chips were made on a 0.35-micron process. A year later came the GeForce 256, presented by Nvidia as the world’s first GPU and also made by TSMC. By the end of 1999 Nvidia had shipped ten million chips from TSMC; by 2001 it was a hundred million. Since 1998, Nvidia has been among the Taiwanese manufacturer’s five largest customers.
The bond between Nvidia and TSMC was not limited to contracts. When a production problem on the 40-nanometre process cost Nvidia a lot of money in 2009, Chang arranged compensation of more than a hundred million dollars after returning as CEO. In 2013 he sounded out whether Huang himself wanted to become CEO of TSMC. Huang declined and stayed at Nvidia.
Made in Taiwan
Today Nvidia is among the most valuable companies in the world, driven by demand for chips for artificial intelligence. In 2023, according to estimates by analyst Dan Nystedt, Nvidia paid 7.73 billion dollars to TSMC, about 11 percent of the chipmaker’s revenue. The most advanced Nvidia chips still come from Taiwanese factories: almost thirty years after that first letter, Nvidia and TSMC are still working together.
That also makes the island a special place militarily. Taiwan is investing in defence against a possible Chinese attack, from a fleet of drone boats to American Altius-600 drones on mobile trailers. Meanwhile, China is expanding its navy with ships such as the aircraft carrier Fujian.
Huang, himself born in Tainan, Taiwan, called himself an ambassador of Taiwan at an event in Silicon Valley in 2024. Taiwanese people had made Nvidia’s GPU the fastest in the world, he said there. It started with a voicemail that nobody returned.
